Autumn Statement: Osborne’s deficit dissembling

George Osborne had a surprise for us all in his Autumn Statement today:

“Today’s figures show that, with or without the APF coupons [the temporary windfall from taking the Bank of England's QE coupons onto the Treasury's books], the deficit is forecast to fall this year.”

That’s odd, because the public finance figures have shown the deficit over the first seven months of 2012-13 running about £5bn higher than in the same period of 2013-14.

Osborne went on to taunt those who have predicted that the borrowing bill would come in higher:

“There are those who have been saying that the deficit was going up this year. But any way you present them that is not what the OBR forecasts show today. They say the deficit is coming down. Coming down this year – and every year of this Parliament.”

This is quite disgracefully misleading.

Read the (very) small print of the Office for Budget Responsibility document and it shows that Osborne’s figures do exclude the APF*. But they do not strip out the one-off effect of his move to take the profits of Bradford and Bingley (B&B) and Northern Rock (NRAM) on to the public balance sheet.

Here’s the OBR 2012/13 deficit forecast between the March Budget and today’s Autumn Statement without stripping out that accounting wheeze:

Yes, it looks like the OBR borrowing forecast has been revised down.

But here’s what happens to the OBR forecast when you exclude the banking profits move:

Yes, the deficit is rising in cash terms.

And as for the deficit “coming down every year”, as Osborne put it, yes, as a percentage of GDP.

But the forecast for cash borrowing is now higher every year, to the total tune of £101bn, stripping out all the accounting tricks, as this shows: